The New Copyright “Small Claims” Proposal

Background: Perhaps the greatest intellectual property dilemma facing American writers is the difficulty of enforcing copyright claims when the damages are not large – and, conversely, the high cost of defending against frivolous or unjustified claims. Currently, all infringement lawsuits must be brought in federal court, and registration of the copyright is a precondition. (Unless a large “expedited” fee is paid, it can take as long as a year to get a registration certificate — the mere filing of the application is insufficient). Attorney’s fees, whether prosecuting or defending, can be high.

In response to this problem, on September 30, 2013, the U.S. Copyright Office finally released the results of a two-year study on copyright small claims. The report recommends the establishment of an alternative voluntary system of adjudication for small claims to be housed within the Copyright Office, but also underscores that “alleged infringers must be allowed to defend themselves vigorously.”

The Office makes the following recommendations:

Congress should create a centralized tribunal within the Copyright Office, which would administer proceedings through online and teleconferencing facilities without the requirement of personal appearances. The tribunal would be staffed by three adjudicators, two of whom would have significant experience in copyright law – together having represented or presided over the interests of both owners and users of copyrighted works – with the third having a background in alternative dispute resolution.

The tribunal would be a voluntary alternative to federal court. Its focus would be on small infringement cases valued at no more than $30,000 in damages. Copyright owners would be required to have registered their works or filed a registration application before bringing an action. They would be eligible to recover either actual or statutory damages up to the $30,000 cap, but statutory damages would be limited to $15,000 per work (or $7,500 for a work not registered by the normally applicable deadline for statutory damages).

Claimants who initiated a proceeding would provide notice of the claim to responding parties, who would need to agree to the process, either through an opt-out mechanism or by affirmative written consent. Respondents would be permitted to assert all relevant defenses, including fair use, as well as limited counterclaims arising from the infringing conduct at issue. Certain DMCA-related matters relating to takedown notices, including claims of misrepresentation, could also be considered, and parties threatened with an infringement action could seek a declaration of noninfringement.

Parties would provide written submissions and hearings would be conducted informally through telecommunications facilities. A responding party’s agreement to cease infringing activity could be considered by the tribunal and reflected in its determination.

Determinations would be subject to limited administrative review for error and could be challenged in federal district court for fraud, misconduct, or other improprieties.

Whether the Congress will adopt this proposal, wholly or in part, is of course unknown – but it is a good start.